What’s Happening On The Fight Not To Bust The Spending Caps?

Last night and this morning there were a couple of interesting press releases which popped out on the subject of Louisiana’s budget and how to spend its one-time surplus. At issue is the statutory spending caps that the Louisiana legislature’s leadership want to throw away so that they can spend the $1.8 billion the state has laying around on the public-policy equivalent of hookers and blow.

First up, last night the Louisiana GOP weighed in on the subject in a release talking about various subjects at the Legislature…

There will be a number of votes, as early as tomorrow (Thursday, May 4) that could result in the legislature breaking the constitutionally mandated spending cap. The spending cap was put in place by previous legislatures so that surplus funds could be put away for a rainy day. It was a good idea then, and it is even more important now that we slow the growth of state spending. If you oppose “busting” the spending cap, please contact your legislators and let them know your opinion.

Then this morning, state treasurer and gubernatorial candidate John Schroder gave an unmistakable “no” to busting the spending caps…

“Paying down our debt is the responsible decision,” Schroder stated. “Once you do that it frees up money that can be used for things like infrastructure, for early childhood education, for teacher pay raises, and for supplemental pay for federal matching grants. Or, you can deposit money for coastal restoration or a new Mississippi River bridge in Baton Rouge if that’s the will of the Legislature. There’s no need to ‘bust the cap.’”

According to the most recent Moody’s U.S. State Liabilities Report, Louisiana is burdened with $35 billion of debt.

Schroder added that debt reduction would bode well for future state bond ratings and that improved bond ratings translate into millions of dollars in savings year after year.

“It’s tempting to satisfy immediate needs and wants, but long term, paying off the debt on the front end allows you to tackle those things down the line, too,” said Schroder.

Spending plans are currently under consideration by the Legislature. There has been much debate over whether it will be necessary to bust the spending cap in order to expend the dollars available.

Paying down the unfunded accrued liability (UAL) debt that represents the state’s pensions for teachers and government employees will not count against the spending cap. Neither will placing money in the state’s Rainy Day Fund.

“Right now we’re swimming in federal money. However, it’s not ‘if’ we’ll suffer from deficits again, but rather ‘when.’ And the forecasts are saying that might be as soon as a year or two from now,” said Schroder. “If we do not want to repeat history with drastic budget cuts, it makes sense to put some money away for a rainy day.”

Here’s a little inside word from the folks we’re talking to – namely that you’re unlikely to see the caps get busted when the budget bills come out of the House of Representatives. What they’re talking about now will keep spending under the caps.

Then the budget will go over to the Senate and the usual stupid Louisiana legislative dance will begin.

The Senate will bust the caps. They’ll send a hookers-and-blow budget back to the House, probably as near to the end of the session as they can. And we’ll then have a conference committee on the budget. Five of the six members of that committee will be term-limited legislators; the only one not termed out being House Appropriations Chair Jerome “Zee” Zeringue, who reportedly has made peace with the Freedom Caucus and Conservative Caucus and is trying to preserve the spending caps.

But of course Zeringue will be outvoted. And then the House will be put on the spot.

The thing to understand is that 36 House votes out of 105 can prevent the spending caps from being busted. As of now it sounds like the opponents of busting the caps have that number, though we’ll ultimately find out.


Interestingly enough, Schroder isn’t the only one talking about the fact that the state is going to run into budget deficits fairly soon. The massive budget and its current surplus are not the products of a healthy Louisiana economy. They’re the result of runaway stupid federal spending being dumped on the state, almost none of which actually makes anything better. The people of Louisiana are probably worse off now than we were in 2015, when the state’s budget was $26 billion instead of $46 billion, and the strangest thing is there are less of us now.

So the idea that we’d run into a fiscal cliff is both completely predictable and utter nonsense at the same time. Why, when you know all this swag won’t last, would you ever consider spending money on recurring things instead of fast-tracking roads and bridges or paying off state debt? Or even giving tax relief where it’s reasonably calibrated to generate economic activity and grow the state’s tax base?

None of that has really been done, so you’ll hit the fiscal cliff. And the same crowd who wants to bust the caps now would then be demanding tax increases to blunt the pain next year or the year after.

And around and around the merry-go-round goes, until all the taxpayers have moved to Texas, Tennessee and Florida.

The good news about this is the legislative leadership, along with the governor who has insisted on this stupid runaway train, are almost all gone after this session. They’re all termed out. It’s very necessary, and somewhat likely, that their replacements will be a lot more fiscally sane and we can sidestep a fiscal cliff by simply just spending the money that comes into the treasury on the basics – and leaving the hookers and blow alone for a while.



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